Beyond Contract Law: Assessing The Need For A Dedicated Franchise Law In India
G Devendra Kumar, SRM Institute of Science and Technology, Kattankulathur Campus, Tamil Nadu, India
ABSTRACT
Franchising has become a significant mode of business expansion in India, yet the relationship between franchisor and franchisee is governed by no dedicated statute. Courts and litigants rely on the Indian Contract Act, 1872, supplemented by the Trade Marks Act, 1999, the Competition Act, 2002, and consumer, tax, and foreign-exchange legislation, none of which was designed with franchising in mind. This paper asks whether contract law, so supplemented, can adequately govern the franchise relationship or whether India needs a dedicated franchise law. It argues that franchising is a relational, investment-specific, and structurally asymmetric arrangement whose characteristic risks, namely pre-contractual information asymmetry, standard-form terms, opportunistic termination or non-renewal, encroachment, and the awkward treatment of post-term restraints, fall largely outside the competence of general contract doctrine and of ex post remedies. Drawing on the experience of the United States, Canada, Australia, France, the European Union, and several Asian jurisdictions, and on the UNIDROIT Model Franchise Disclosure Law, the paper contends that India should enact a calibrated, disclosure-centred statute with a short list of relational protections, rather than either leaving the field to contract or adopting a heavy registration regime. It outlines the principal features of such a statute and answers objections grounded in freedom of contract, regulatory cost, and legislative competence.
Keywords: Franchising; Franchise Regulation; Contract Law; Pre- Contractual Disclosure; Competition Law; India.
